A strange question...

[IBroke]

This is something I always wanted to know:

If I finance a car with a larger downpayment that would actually leave me with equity in the vehicle and I have an open judgement against me, can they repo the car and take that equity ALTHOUGH I'm current on the loan?

[IBroke]

I found this advice. Is that really legal and true?

Place your own liens.

[jlmaca]

I found this advice. Is that really legal and true?

Place your own liens.

This is interesting. You could also protect yourself by assigning ownership of the car into a New Mexico Limited Liability Company. No one will know the owner unless the owner (you) tells them. It is managed by a single person (you). It has no IRS EIN . There are many other benefits and it is perfectly legal and not very expensive.

[tacomeat]

im sort of in the same situation. i still owe around $6000 but my car, depending on which value they use, is worth about $9-10,000.

even though i have equity in it, it seems like it might be more trouble than its worth for a creditor to do. if they seize it, i guess they'd have to pay off the loan, leaving them with $3-4000, but the'd have to sell it off and probably wouldnt get that much and they'd have the expenses associated with doing all of that.

plus my state has a vehicle exemption of $5000 (at least for bankruptcy - still not 100% sure if that applies to a judgment situation).

all in all, im thinking im ok, but i dont know enough to know for sure.


regarding your situation, my only concern would be the timing of doing it - because it would be obvious to a court why you are doing it - to avoid it being taken. had you set it up that way when you first got the car or before you got behind, then it might work if you knew how to do it (which i dont).

[IBroke]

regarding your situation, my only concern would be the timing of doing it - because it would be obvious to a court why you are doing it - to avoid it being taken. had you set it up that way when you first got the car or before you got behind, then it might work if you knew how to do it (which i dont).

Thanks for your advice!

Actually, I won't be "behind" on the car. The problem of a judgement lien would only arise after I paid it off completely. And once this car belongs to me, I don't know why the court would have an issue with me using the car as security for someone else who is lending me money.

Florida has a "lien-exemption" of $1000 on a car so it is highly questionable if any one would put a lien on the car in the first place. It is an 11 year old Mercury Sable with 115K miles on it. Carmax appraised it more than a year ago at $2K so I might be reading to much into the situation...

[HHM]

Not sure how you would actually place the lien. The title is in the possession of the lender (presumably), there would be no way for you to do it without getting the primary lender to sign off. Also, the primary lenders lien would take priority anyway. Sure, you can "pledge" a car as collateral in a contract, but unless the lien is on title, it is not a perfected security interest and this secondary lien holder would not have a valid claim against the vehicle.

I don't see how this works, this sounds more like "ad hoc" advice (kinda like the guys that go to jail because they think income tax is unconstitutional).

[catleg]

NJ motor vehicle titles have spots for two liens on them.
However to record a second lien requires the original title which your first lien holder would retain.
So I imagine you'd have to somehow submit it through the first lienholder.
Maybe a car financing place knows how to do this, I imagine it's a real pain in the butt.

[IBroke]

-doublepost-

[IBroke]

As I said, my car is so old, it probably won't attract many debtors in the first place (and I only have one judgement against me).

BTW, the car was bought and financed with my mother as co-signer. The title says "OR". She's planning on paying off the loan and I'm planning on filing CH7 immediately thereafter and list the entire car's value as an asset in my BK-filing (I don't have any other assets and I'm going to be well below the exemption. It'll be a "no asset"-case).

Do I also have to consider any possible judgement liens against my mother, too? If she has a judgment lien against her, is that automatically attached to the car as well or would they have to file that separately? The official title-search website only shows the original car financing company as a lien-holder.

If possible, I want to to be the sole-owner of this car prior to filing. Is it necessary to take my mother off the title?

[catleg]

No, judgments do not automatically attach to motor vehicles.

Cars need to be seized by a writ of execution against personal property.

You need to pay off the loan, get the title back from the lender with a lien release on it, then her and you both sign the back of the title transferring it to your sole ownership, and then you retitle it with the state.

In theory there could be issues with a transfer of assets if there is a judgment outstanding against your mom, but chances are you'll be fine especially if the value of the car is below your state's (non-BK) exemptions.

[IBroke]

No, judgments do not automatically attach to motor vehicles.

Cars need to be seized by a writ of execution against personal property.

You need to pay off the loan, get the title back from the lender with a lien release on it, then her and you both sign the back of the title transferring it to your sole ownership, and then you retitle it with the state.

In theory there could be issues with a transfer of assets if there is a judgment outstanding against your mom, but chances are you'll be fine especially if the value of the car is below your state's (non-BK) exemptions.

Thanks, catleg!

So as soon as the car is paid off and we receive the title, we will go to our tax collector's office (I think they are handling these transactions) and take her off the title. After that, I can file CH7. That should keep the car safe from all creditors and neither I nor my mother will receive an "IIB"-notation on the car-loan on our credit-reports.

[catleg]

IIB is a neutral element in credit reporting.
The best case scenario is never late then Bang, IIB.
Otherwise some creditors will keep reporting past lates and charge offs even after the bankruptcy.
I learned this the hard way.
Likewise, judgments will stay on your credit, whether they are paid off (satisfied) or discharged by bankruptcy.
A trick for dealing with court items:
If you can arrange to move (change your address) you have an excellent chance of disputing the bankruptcy or judgments on your credit report to get them removed, at least this worked 10 years ago.
Court records generally mask any SSN or DOB info, so without a matching address they tend to be very hard to verify.
And since there is no "data furnisher" to push the dispute out to, it's not clear to me how they even attempt to verify them at all.

[IBroke]

IIB is a neutral element in credit reporting.
The best case scenario is never late then Bang, IIB.
Otherwise some creditors will keep reporting past lates and charge offs even after the bankruptcy.
I learned this the hard way.

We were never late on that car-loan, so that shouldn't be an issue. The first thing the BK-attorney told me was not to pay off the car prior to filing - but when I explained that I didn't have any other assets and that the value of the car was so low, he agreed that it wouldn't be a problem.

I'm currently sharing the car with my mother and including it in BK doesn't have an advantage - at least none I can think of. there are 3 options when filing: Surrendering the car (that doesn't work. It's the only car we have and my mother needs it for her business), paying it off (well, that's basically what I'm going to do - just prior to the BK) and reaffirming (that doesn't do the trick either because I will lose money. The current interest-rate on the car-loan is 23% so the faster I pay it off, the better). And even if I would dump the car during BK - my mother is co-signer and still liable - so I guess paying it off prior to BK should be OK.

Likewise, judgments will stay on your credit, whether they are paid off (satisfied) or discharged by bankruptcy.

Once discharged, I'll try to have the judgement against me vacated. I've heard of several people of this board who were successful. They paid a small fee and the judgement was vacated and removed from the credit report.

A trick for dealing with court items:
If you can arrange to move (change your address) you have an excellent chance of disputing the bankruptcy or judgments on your credit report to get them removed, at least this worked 10 years ago.
Court records generally mask any SSN or DOB info, so without a matching address they tend to be very hard to verify.
And since there is no "data furnisher" to push the dispute out to, it's not clear to me how they even attempt to verify them at all.

Thanks for that "trick"..